Every cent counts and adds to total expenses when running a business.
Mileage reimbursement can constitute a hefty portion of these expenses, so keeping a close eye on whether employee reports are accurate is crucial.
Otherwise, you risk spending more money reimbursing your employees, falling victim to odometer rollback fraud, or, even worse, getting into a legal dispute with the IRS over incorrect odometer readings.
Luckily, relying on an odometer isn’t the only way to capture mileage. You can use a more reliable and accurate method - a GPS-powered mileage tracking tool.
This article will compare GPS vs. odometer accuracy and help you understand how to stay IRS-compliant and cut your expenses.
Still relying on odometer readings and paper mileage logs?
With Timeero, you can track mileage accurately and efficiently, and do much more.
Before deciding on GPS vs. odometer accuracy and which method is better for your business, we must understand how each of the two works.
Simply put, the odometer is a device that measures the distance a vehicle has traveled by counting wheel rotations and multiplying them by the tire circumference.
The tire circumference is calculated by multiplying its diameter by pi or 3.1416.
This is a pretty simple mechanism that has been in use for decades. Although mechanical, digital, or electromechanical, they all work by recording the number of wheel rotations.
The main difference is in the technology used. Since digital odometers are more sophisticated, they’re considered more accurate than their mechanical counterparts.
How Accurate Is the Odometer Reading?
No odometer is 100% accurate, so there’s a discrepancy when comparing vehicle odometer readings with the distance calculated by online map services.
Various factors, such as worn-out tires, tire pressure, and changes in tire size, can impact odometer accuracy. Generally, they are considered fairly accurate and provide a good estimate of the distance traveled by a vehicle. Regular maintenance and calibration can help improve their accuracy.
Avoid the costs of inaccurate mileage reporting with the Timeero mileage tracking system.
It’s also worth mentioning no law regulates odometer accuracy. However, the Federal Odometer Act forbids tampering with vehicle mileage, but that’s something that you have to pay attention to when purchasing a second-hand business vehicle.
Here are the main reasons why the odometer might be off.
Worn Out Tires
Since the odometer counts the number of wheel revolutions, it’s logical that tire condition can significantly impact the readings.
New tires have an average tread depth of 10/32 to 11/32 inches, which means their diameter and circumference are greater than those of old, worn-out tires. In most states, the legal minimum tread depth is 2/32 of an inch, and such shallow and worn-out tires are shorter in diameter by ½ to 6/10 inches.
Translated to layperson’s terms, this practically means that new tires with full tread depth will travel more distance in a single revolution.
Given that the odometer uses tire diameter and circumference to calculate the distance, it’s clear how wear and tear influence the readings and affect mileage data.
Wrong Size Tires
Similarly, switching to bigger tires or using mismatched tires will also mess up your odometer readings.
That’s why it’s essential to ensure your tires have a good tread depth, are properly inflated, and calibrate the odometer in case you change the tire size.
However, the trouble is that it is hard to monitor all these factors when your employees are using their own personal vehicles for business purposes. It would be too much work always to check their tires and odometers to minimize the error margin.
Different Odometer Types
Another factor that can make a significant difference when comparing GPS vs. odometer accuracy is the type of odometer used.
We’ve already mentioned that there are mechanical, electronic, and hybrid odometers. Unfortunately, none of them can match the GPS accuracy.
Mechanical odometer
The mechanical odometer has an error margin of up to 5% by default. But if we add the previously mentioned wear and tear factors, the actual gap can reach even 12%-15%.
Electronic or hybrid odometer
When it comes to the electronic or electromechanical odometer, it’s usually more accurate because its data is based on magnetic or optical sensors used for counting rotations. This means that its margin error doesn’t exceed 7%.
Speedometer
In addition to this, the car speedometer can affect the odometer readings.
The Society of Automotive Engineers defined in its standards that speedometer, tachograph, and odometer readings can vary +/-4% from the actual values.
However, given that the speedometer can’t show lower than the actual speed of the vehicle but can show up to 10%+6mph more if the odometer is connected to the speed sensor, it will only give higher readings.
Most car manufacturers calibrate their odometers and vehicle speedometers to allow for 5-10% higher speed readings because of traffic safety and preventing accidents to ensure that the drivers won’t cross the given speed limit.
As you can see, there’s much to consider when discussing the odometer accuracy. All these factors can make your employees’ mileage reports significantly less accurate, which will, in turn, increase your reimbursement expenses.
Plus, using the odometer also makes it easier for your employees to pad their expenses, which is why expense reimbursement is among the top 3 occupational fraud schemes, occurring in 11 percent of the cases.
What Is the Difference Between the Distance and Odometer Readings?
Since the two are entirely different and can’t be compared, a much better question would be: How to ensure your employees accurately capture mileage vehicle travels using the odometer?
This isn’t complicated at first glance: all they have to do is take note of their odometer reading on their company mileage logs before and after every business trip. The difference is the mileage that they should be reimbursed for.
But, sometimes, employees forget to jot down odometer readings and use the guesstimate method when submitting their logs. Or they can, for example, take a longer route. Not to mention that some employees tend to pad their mileage claims intentionally.
In each of these cases, your reimbursement expenses will be higher than they should be, and you can bet that the IRS won’t be happy about that when the time comes to file your tax return. Remember that mileage reimbursement is tax-free if the mileage logs comply with the IRS regulations. This is another reason why the GPS vs. odometer accuracy comparison will favor GPS data and satellite-based technology.
This sophisticated system can pinpoint your location within a 5-meter radius since it relies on the data from at least four satellites circling the Earth.
Thanks to being equipped with atomic clocks, GPS satellites provide precise time. The time information is incorporated into the satellite’s broadcasts, and the GPS receiver uses this data to determine when the GPS signal was sent.
Based on the signals received from the Global Navigation Satelite System, the tracker uses its distance from it to determine the exact location, speed, and mileage.
So, you won’t be wrong to conclude that odometer readings are usually flawed to a certain extent and that the winner of the GPS vs. odometer accuracy debate is the former.
Is GPS More Accurate Than Odometers?
In short, when comparing GPS vs. odometer accuracy, GPS devices win by a landslide since the tire condition and similar factors do not determine whether the captured mileage will be accurate.
GPS readings are more accurate than odometers, as they rely on advanced satellite signals to determine the exact location, movement, and speed of the vehicle in real time. This provides a comprehensive and precise insight into a vehicle’s movements, distance, and patterns.
As we discussed earlier, odometers can be affected by various factors that lead to inaccuracies, such as the wear and tear of tires, the fluctuations in tire pressure, and the changes in tire dimensions.
If your vehicle has worn-out or mismatched tires, your odometer’s accuracy can suffer. On the other hand, GPS systems use accurate geographical positioning and atomic clock, which make them more reliable than the odometer in your vehicle.
What Are the Benefits of GPS Vehicle Tracking Over Odometer Accuracy?
GPS vehicle tracking offers many benefits over relying on the accuracy of an odometer. Here are some of the reasons why you should switch to GPS vehicle tracking:
Real-Time Tracking. GPS tracking allows fleet managers to instantly access automated reports and advanced management tools. This helps managers monitor and manage their field staff and vehicles effectively. With live location updates, they can make operational adjustments quickly and improve efficiency.
Alerts and Notifications. High-quality systems can send alerts to managers when certain events occur. For example, specialized GPS fleet tracking systems can alert you to situations like speeding, sudden braking, accidents, or unauthorized use of vehicles. These timely alerts enable managers to act and contact the relevant authorities in emergencies.
Data-Driven Decisions. Data collected by vehicle tracking systems help you make decisions based on facts and evidence. You can use interactive dashboards to identify, analyze, and correct driver behaviors, optimizing operations.
Route Replay. Top-notch GPS tracking systems have the unique feature of replaying routes using breadcrumbing technology, allowing you to review your vehicles’ exact paths and speeds.
What Does This Mean for Employers With a Mobile Workforce?
Solving the GPS vs. odometer accuracy dilemma can be a game-changer for all businesses that rely on mobile employees. Ensuring that the mileage is accurately captured and keeping reimbursement expenses in check can be quite an endeavor when using the manual approach with odometer readings.
Nowadays, most smartphones and tablets have GPS chips, which means you can easily track your employees’ mileage, true speed, and even routes using this technology.
Still, the GPS and mileage tracking apps differ regarding the frequency and accuracy of GPS tracking and the additional set of features they’re providing.
We tested the best GPS and mileage tracking apps offered at the market today, so we suggest that you check out our Best Mileage Tracker Appsto learn how they compare.
How Can Timeero Help Me Track and Manage Business Mileage Costs?
A GPS-powered software like Timeero will streamline the mileage tracking process and bring you peace of mind regarding tracking expenses, mileage reimbursement, IRS compliance, and employee accountability.
Timeero system is simple and easy to set up, administrate, and use on the web portal, as well as iOS and Android mobile devices.
Look at our comprehensive Timeero review to get a complete picture of how it can benefit your business. But if you’re short on time, here is a summary of the mileage tracking set of features.
Improve Transparency and Accountability
Employees can check their mileage and view their routes using their mobile app.
Timeero’s mileage tracking app powered by GPS gives you an accurate insight into how many miles every employee traveled. Besides that, its breadcrumb trail feature offers even more details about their every trip since you can practically replay each route.
You can see employees’ entire route, with additional details, such as timestamped GPS points and speed.
The timestamped breadcrumbs will also give you information on the vehicle’s real speed and the driving behavior of your employee. Finally, the timestamp vouches for location accuracy, which means that you’ll improve the accountability of your employees and ensure the IRS compliance of your mileage log.
Segmented tracking is another helpful feature when tracking your employees’ mileage, business travels, and other work-related activities.
See a timeline of employee’s activities during a workday broken down into segments
The feature provides a visual timeline of your employees’ data and all the information you need about the on-the-clock activities.
The app shows you a breakdown of employee GPS data in segments:
Business travels - mileage and duration of travel
On-site time
Such a hassle-free approach will let you spot potential problems on the field, such as excessive idling or travel time, taking longer routes, or even speedy driving. And as you can replay each route, you can get into even more details.
Two more mileage-tracking features can cut down your mileage costs and improve accountability:
TheShortest Route feature will display your employee the shortest path to their destination.
The Timeero app can recommend the shortest route to a particular destination
The Suggested Mileage feature will compare the actual route an employee took to the shortest one, showing you the distance in mileage.
Easily see the difference between suggested and actual mileage
Stay IRS Compliant
The IRS is stringent and harsh when it comes to tax returns. For example, suppose they suspect that your deduction claims are off. In that case, you can be subjected to an audit and scrutinized.
Easily generate mileage and cost reports
Keeping your mileage logs compliant with the IRS requirements is essential to prevent this unpleasant scenario.
That means recording the following details:
The number of miles traveled for business purposes
Total miles traveled during the business year
The dates of business trips
The purpose of each trip.
Keeping all these records can be complex and prone to human error, and if any of these details are missing, you can be in trouble with the IRS.
A GPS-based app like Timeero that will capture all the data in an IRS-compliant manner can be a life- and budget-saver. As commuter mileage is not tax-deductible, Timeero also offers commuter mileage features to stay IRS-proof.
Streamline the Expense Reporting Process
As a result, you’ll both have access to real-time accurate mileage readings while eliminating the odds of padding business travel expenses.
You don’t even need to install expensive and bulky hardware. All your employees need to do is download the app to their mobile devices and log in to their accounts, and they’re good to go.
Timeero offers many different integrations, including the most popular accounting and payroll applications. This way, you can simply approve reports and export them to the accounting software with a click.
Timeero integrates with the most popular accounting and payroll solutions.
You and your employees will save time by ditching the old-fashioned pen-and-paper approach and spreadsheets.
So, it’s time to stop dwelling on GPS vs. odometer accuracy and switch to practical and reliable solutions, such as Timeero, to save money, time, and energy.
Upgrade your mileage tracking game with Timeero - accuracy and efficiency at your fingertips.
Andjelka is a skilled researcher and writer with 6+ years in digital marketing, specializing in SaaS and B2B content. With a background in sociology, social work, and journalism, she crafts strategy-driven content that resonates with audiences. Outside of work, she enjoys yoga, swimming, and relaxing with her cats and Leonard Cohen’s music.
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